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Environmentalists fighting a controversial oil pipeline insisted today that the Canadian crude it would carry will be exported by refiners instead of remaining inside the U.S.

The arguments were advanced in a new report from Oil Change International, a clean energy advocacy group that opposes the proposed Keystone XL pipeline, which would stretch 1,700 miles from Alberta to the Gulf Coast. The eventual fate of the Canadian oil sands crude — and the possibility that it would be exported after a short trip through Gulf Coast refineries — also has come up in congressional debates about Keystone XL.

According to the report, the refiners at the end of the pipeline’s planned route (in Port Arthur, Texas) are focused on expanding exports. Oil Change International says those plans undermine a common industry argument in favor of the pipeline — that it will enhance U.S. energy security by supplying America with more crude from a friendly North American ally.

The energy security argument is also a key factor in the Obama administration’s analysis over whether the pipeline would be in the “national interest.” Secretary of State Hillary Clinton is set to make that national interest determination by the end of the year — paving the way for a presidential permit authorizing the project.

“To issue a presidential permit for the Keystone XL, the administration must find that the pipeline serves the national interest,” said Stephen Kretzmann, director of Oil Change International, in a statement. “An honest assessment shows that rather than serving U.S. interests, Keystone XL serves only the interests of tar sands producers and shippers, and a few Gulf Coast refiners aiming to export the oil.”

The report hones in on the long-term plans of Valero, the nation’s top independent refiner, and cites recent investor presentations and comments by CEO Bill Klesse that outline a growing diesel export strategy. According to financial disclosures, Valero exported 65,000 barrels per day of gasoline to Mexico and South America during the first quarter of 2011; at the same time, it sent 165,000 barrels per day of diesel to Europe and Latin America.

According to the report:

“The idea that Keystone XL enhances U.S. energy security is undermined by Valero’s business model that seeks to export products made with imported oil while further importing gasoline from a third country.”

Oil Change International also says Valero is poised to claim big tax benefits from its Port Arthur refinery’s status as a Foreign Trade Zone, which ensures duty-free treatment on items that are processed within the zone and then reexported.

According to Oil Change International:

“Usually, refineries importing oil tax-free will still pay taxes when selling the refined products into the U.S. market. By both importing into and exporting from Port Arthur, the company will avoid paying tax on the product sales.”

Valero spokesman Bill Day called the report “misleading,” and stressed that even though the company is exporting an increasing amount of products, “the volume of exports remains relatively small,” and “the vast bulk of our products are made for domestic consumption.”

“The pipeline would provide a steady supply of oil from a nearby and friendly trading partner, in a manner that is more efficient than bringing cargoes of oil in by ship,” Day added. “Keystone will generate 20,000 jobs, increase property values and generate tax revenue that will directly benefit hard-hit cities, counties (and) school districts.”

The potential fate of the Canadian oil sands crude that Keystone XL would carry also has been debated on Capitol Hill. During a May House Energy and Commerce subcommittee hearing on Keystone XL, National Wildlife Federation vice president Jeremy Symons insisted that the pipeline would give oil companies an avenue for exporting the Canadian crude to energy-hungry China.

“The pipeline will take Canadian oil that is already flowing to America away from U.S. refineries in the Midwest and send it instead to foreign-owned refiners on the Gulf Coast for export,” Symons said at the time.

The $13 billion Keystone XL pipeline would double the capacity of an existing TransCanada Corp. pipeline network that now ends in Cushing, Okla. The proposed pipeline expansion initially would allow an additional 700,000 barrels per day of crude oil to flow into the United States.

The oil it would carry is synthetic crude and diluted bitumen harvested from the oil sands of Alberta, Canada using open-pit mining and in-situ techniques.

Canada is estimated to have 175 billion barrels of recoverable crude oil — a supply that is more than eight times U.S. reserves and which puts it second only to Saudi Arabia in stockpiles. Right now, almost all of Canada’s oil sands crude goes to the U.S. — about 1.1 million barrels per day in 2010. But the crude cannot be delivered by pipeline to the Gulf Coast.

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Jennifer A. Dlouhy covers energy policy, politics and other issues for The Houston Chronicle and other Hearst Newspapers from Washington, D.C. Previously, she reported on legal affairs for Congressional Quarterly. She also has worked at The Beaumont Enterprise, The San Antonio Express-News and other newspapers. Jennifer enjoys cooking, gardening and hiking. She lives in Washington, D.C., with her husband and toddler son.

20 Comments

Export / Import numbers can be misleading, its influenced by a lot of factors.

We’ve been exporting diesel to Chile for a long time, because Chile generates electricity with diesel. That could be for a lack of refining in Central America.

Could be that diesel is a byproduct of gasoline or other refined product production, and an excess is created.

We import gasoline from Europe, because they over produce gasoline to get the diesel. Europe runs on diesel.

Oil and refined products are fungible, so say Japan purchase oil from Brazil …… so we send Alaskan oil to Japan and Brazil sends us the equivalent , to save shipping costs. Don’t know if it happens, but this is what you get into when you start using export numbers alone.

Be interested in Valero’s response.

Hey, Iran imports gasoline, they have no refining, they send oil to Russia who sends it back as gasoline.

OK, some goes somewhere else too. Won’t it create jobs, jobs, jobs? If Canadian crude gets exported from Canada as oil, goes to China, gets refined there, and gets burned there, doesn’t that CO2 end up in the same place as if it were done here? Don’t you think US refineries have better pollution controls? How about the added pollution from tankers moving oil vs. a more efficient pipeline? Texas is buying electricity from Mexico while it’s really hot. Maybe we should just put all the coal fired plants there. There, we don’t pollute from coal anymore, after all the air from Mexico never makes it here.

the FUTURE is what the keystone XL pipeline is shipping south. this scab on my province has hurt a lot of people, probably as many as its helped actually, but we’re allowing the continued poisoning of our water supplies. in the days to some, more and more will be harmed by pollution’s legacy.

no one here says “we should leave the oil in the ground” because that should would be truly ignorant to the value of the commodity, but if you look at conventional oil reserves in other countries, the extraction process is much less destructive then strip mining, AND the royalties paid on that oil are significantly higher.

if we’re going to mortgage our future, we should be thinking about careful management of our resources, not wholesale sell-off at a faster rate.

Ridiculous. These wackadoodle leftists will and say anything to prevent this pipeline from being built. They are liars AND hypocrites (what, you think Darrell Hannah showed up for that protest using public transit, did you?

I cannot believe how far these people will go to stretch a discussion and prevent anything having to do with oil from going forward. I never have been able to understand how a sane person could construe what the State Dept. has to do with the issue. Obama better watch out, Hillary could do an end-around (see the Nebraska discussion angle here too) and approve the XL. WooHoo, that could be fun!

Once again, the enviro-fascists have found yet another cause to try and bring down the energy industry. This pipeline will create thousands of jobs building the pipeline and in the Houston area refining the oil. Isn’t this what the leftists supposedly wants, well paying jobs?? This will bring jobs and money to this area and I will not sit by while these ignorant morons demonize an industry that is solely responsible for my and my family’s well-being and success. I and my family owe our quality of life and opportunities to the energy industry. Oh, yeah, im 24. Leave the industry alone if you know what’s good for you.

I don’t get how you people can be so selfish. You want us to leave the energy industry alone so you can profit. So you want to profit while the world risks suffering due to disgusting pollutants? Why? Why can’t we do as other countries all ready are and move on to sustainable energy? It’s available and would create even more jobs than one damn pipeline. There would be so much construction needed to get us up and running. But no, you guys want to keep us in the dark ages and keep killing ourselves so you can avoid change. Why don’t you move forward into the next age with the rest of the world and accept a new job with sustainable energy? You know you could allow America to be the forrunner in the world as we have been, or you can keep you position of comfort and let Germany and China surpass us. But you don’t want America to be number 1, you want to keep your status quo.

No Ian T., we just don’t live in your fantasy world. All this ” sustainable energy ” you speak of, has not been invented or perfected, or can not be produced on a scale necessary for our countries economic survival.

I think you … take for granted, what oil and gas has done for our country, and that it will be needed for another 50 years if not more.

You need to sit down, shut up, and get out of the way … before you screw up the greatest nation on earth.

Ian T., I am interested to know about the sustainable energy that other
countries have moved on to from polluting fossil fuels. Please provide a
list of the countries and the energy form they have moved to. Thank you.

Not only will it damage the economy from US job losses but get the part about they say they will raise your property values?? Not only are the oil companies going to starve out the unemployed and treat them as shields but they will force you to pay more money in property taxes on your houses. Talk about a no brainer on kill the pipeline??

Tar sands oil from Canada is a rape of the environment! Not only does it devastate the landscape as badly as any mountain removal mining project in WV but the energy used to get the oil out of the sand and into a pipe line far exceeds the net energy that the oil will produce downstream! Oh and for all of you oil field armchair QBs, I’ve spent a fair amount of time with Syncrude up in Ft. McMurray! Talk about a frontier town!

And I love how the Republicans will push this as a way to bring gas prices down which it won’t in any way! And then you also have to remind the GOP that this oil is coming out of Canada, those Socialists to our north!

Mr. Stretchy, you are FOS, and a quick Google or Wikipedia search can confirm this. If it required more energy input than could be extracted, then nobody would be in that business. And certainly nobody would be expanding with a pipeline and larger tar sands operations.

Of course as we all know, that type of business model is reserved for ethanol growers who are able to making money despite, in many cases, negative energy output because of massive subsidies.

Ian T. wrote:
“So you want to profit while the world risks suffering due to disgusting pollutants? Why?”
—————-
So you can get online with your computer in your air conditioned house for starters. IF you want to end it, move to the woods.

Dollar – Your name says it all, you are in it for 1 thing. You don’t care about the quality of the world you live in, as long as you’re getting paid. But you did say 1 intelligent thing.

“…and that it will be needed for another 50 years…”

You’ve taken a step to admitting that not only do we need to get off fossil fuels, but that it will happen. Good job, I’m very proud of you. And I don’t doubt that it may take around another 50 years, give or take depending on our effort. Now the point you are failing to see is that the technology does exist to go renewable, absolutely. But there is no money being put into advancing it. At least not here.

I do completely understand what fossil fuels have done for us, that industry boom put us in power. I get that. But it’s time is up. Fossil fuels are now holding us back, period.

I would like to be able to log online with my computer in my (well I actually don’t use A/C, but sure) electrically run home without raping the rest of the world. What good is it to live in the woods when it’s being poisoned K? And once I have my renewable energy I can live in the woods, with my internet and electricity.

SB- Here is a quick google search that landed me enough to prove my point. I will trust in everyone else here to actually make the effort and look for more info, hoping that they actually care about this countries future. All right, let’s see what we have here.

GERMANY- On the way to being 100% renewable energy by 2050. Like I said I get the time it can take to make the switch. But they are starting now and it will take another 48 years. So when will we start?

CHINA- China is currently the forerunner in producing equipment to make renewable energy possible, so as this article says. “…the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.”

So go on with your gas selves. Keep up feeding the pockets of the top few really raking in the $$$ from fossils while you sit here and fight for your meager life based on their droppings. The scraps they let you have so we can let China, Germany and Iceland make us look like chumps. Keep sending OUR money to other countries since our pittance of an oil supply will still leave us sucking on the nipple of other countries in the long run. Hold us back from staying leaders in this world. Good on ya, keep it up.

Or maybe, just maybe, you can look past your self entitled present existence and look to the rest of the world for what is to come. Move forward before the rest and lead, or sit back and get buried in oil.

lan T.,
Don’t be so impatient and critical. Look how fast Texas vaulted to the top in Wind. We can only “push the envelope” so fast without hurting what we have now for some goal in the future. Some technologies take longer to implement. Progress isn’t a straight line. How can you compare Iceland’s use of geothermal with our a/c situation? Germany & Iceland & China haven’t contributed too much to keeping the Straights of Hormuz open have they? Where would they be right now if we hadn’t carried the ball for them? Your woods could have contributed to the external combustion engine technology (steam engine)of trains until the internal combustion engine took over with the diesel-electric. Wood is more renewable isn’t it but would that have been smarter to promote? Chill out, your children may have to leave the woods in an ICE car to get a job to make and innovate computers and the internet you enjoy. Hey, believe it or not, we are all in this together.

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